Wednesday 24 August 2011 03.24 EDT
First published on Wednesday 24 August 2011 03.24 EDT

Sir Martin Sorrell's WPP has reported a 37% year-on-year increase in pre-tax profits of £334m in the first half, as the marketing services company trimmed its full-year growth forecast in the face of tougher economic conditions.

WPP, the world's largest marketing services company, reported a revenue increase of 6.1% year on year to £4.7bn in the six months to the end of June.

In the first quarter WPP's revenue growth stood at 6.7%. This dropped to 5.6% across the second quarter due to comparatives against a rosier economic outlook in 2010 and the impact of the World Cup.

The company, which recently said it was "defying the doomsters" by reporting 6.2% revenue growth for the first four months and 5.5% in June, said revenues slipped back in July to just 4.3% growth because of tougher comparatives.

Analysts at Deutsche Bank believe WPP's target of 6% revenue growth for the full year looks "increasingly stretched" and had been looking for the company to report July growth of between 5% and 6% to be able to plausibly deliver its full-year forecast.

WPP said on Wednesday it was slightly tempering its full-year revenue growth forecast to expect a "very similar" performance to the 5.9% the company has delivered across the first seven months of the year.

North America, which accounts for 35.6% of total revenues, grew revenues by 5.4% in the first half and "continued to show remarkably strong growth".

The UK, which accounts for 12% of WPP's global revenues, grew by 5.1%.

Sorrell reiterated that WPP is committed to moving its tax base back to the UK from Dublin.

"The government is yet to introduce legislation [but] they have a consultation paper out and if that process goes it will be 2012-13 that we come back," he said, speaking on BBC Radio 4's Today programme. "We are committed to coming back".

Western continental Europe, a region which has struggled, showed "considerable improvement" in the second quarter as revenue grew 2.9%.

Austria, Denmark, Finland, Germany, Ireland, the Netherlands and Turkey all showed double-digit growth in the second quarter, but France, Greece, Portugal and Spain "remain tougher", the company said.

The "rest of the world" – Asia Pacific, Latin America, Africa and the Middle East and central and eastern Europe, which account for more than 28% of total group revenues – grew by 10.5% in the first half.

Latin America was the strongest growth region in the second quarter with revenues over 12%.

WPP said it has not seen any cutback in spending by companies or consumers due to the worsening economic climate – yet.

"So in summary, so far so good in 2011, with forecasts in reasonable heart, but there are storm clouds and we still have to see how the latest stock market crisis affects consumer and client thinking and actions," said Sorrell, the chief executive of WPP.

"The 'LUV' or 'LuVVy' shaped recovery remains battered but intact, particularly with the world moving at different speeds both geographically and functionally, but there is need to exercise significant caution".

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